Invest
Tensions emerge as house prices continue to rise
A strong economic backdrop has led to a near 10-year high in consumer confidence, but evidence of tensions in the housing market have emerged as a result of rising affordability issues.
Tensions emerge as house prices continue to rise
A strong economic backdrop has led to a near 10-year high in consumer confidence, but evidence of tensions in the housing market have emerged as a result of rising affordability issues.
Westpac-Melbourne Institute’s consumer sentiment survey showed that in March the index rose by 2.6 per cent to 111.8 points and is now just 0.2 points below December’s decade high.
The rising consumer confidence reflects last week’s GDP figures showing that Australia’s economy is improving.
The big four bank said Australia’s containment of the virus, a vaccine rollout that will bring an end to the pandemic and an accommodating stimulatory government policies have all contributed to the sustained lift in consumer sentiment.
Despite an overall growth in consumers sentiment, Westpac said the survey showed “evidence of tensions emerging in the housing market”.
With the latest CoreLogic figures showing a 2.1 per cent increase in national dwelling prices for February, Westpac’s ‘time to buy a dwelling’ index slipped a further 3.6 per cent.
This is the fourth quarter in a row that values are down, with consumer sentiments around buying a home down 11.9 per cent from its peak in November.
“We have found this index to be closely linked to affordability in the past,” Westpac’s chief economist, Bill Evans, said.
“The decline suggests resurgent prices are already starting to curb buyer interest and that we may see some easing in the recent surge in demand from owner-occupiers, particularly from first home buyers who are the most sensitive to affordability.”
While consumers are less buoyed about buying a new dwelling, sentiment around future value continues to increase, with the index rising by a further 3.1 per cent in March to a new seven-year high.
House price expectations are particularly buoyant in NSW, Queensland and Western Australia, which are all predicted to grow up to 4.6 per cent.
“Surprisingly, expectations eased in Victoria, the state index easing back 2.1 per cent still 4 per cent below its pre-pandemic level,” Mr Evans said.
“To date, the optimism around house prices contrasts to reported attitudes towards ‘real estate’ as an investment option,” the economist concluded.
About the author
About the author
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Property
HSBC forecasts 2023 house price decline of up to 10%
The firm had previously predicted a modest rise for house prices next year. ...Read more
Property
Perth house prices continue climbing to a record high
While growth may have come to an end in Sydney and Melbourne, Perth house prices are still on the rise. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Property
HSBC forecasts 2023 house price decline of up to 10%
The firm had previously predicted a modest rise for house prices next year. ...Read more
Property
Perth house prices continue climbing to a record high
While growth may have come to an end in Sydney and Melbourne, Perth house prices are still on the rise. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
